A Comparison Of Market Structure And Stability In The Process Of Opening Of The Cross-Strait Banking

With the trend of global economic integration, many countries relax control of the financial sector, the banking sector continuously improve the degree of openness, and banking market structure will also change, which is bound to affect the banking stability.Based on the perspective of differences in the banking market structure, and the experience and data of Chinese mainland and Taiwan, this paper attempts to analyze the relationship of competition, market concentration and stability in the opening process, and brings some suggestions to the opening process of China's banking industry.The bank owns non-symmetrical structure between assets and liabilities, and low tolerance of liquidity risk. So how to maintain the stability of banks becomes one of the most important characters of the optimal banking market structure. As a special section, the optimum market structure is oligarch competitive market. From a global perspective, it's a trend that the banking sections maintain market concentration to a certain extent in a competitive environment.With the similar cultural backgrounds, geographical environment and the banking system before 1990, Taiwan and the mainland may share the successful experiences and failures in the opening process of banking. Reference to previous studies, this paper analyzes the market types and market concentration of the cross-strait banking, which formed in the opening process, and then estimates the basic characteristics and trends of the cross-strait banking industries in empirical analysis. From the characteristics of market structure, Taiwan's banking market concentration is low, competition is more intense and it is close to the atomic model of the perfectly competitive market structure, while the banking section in the mainland is in a monopoly competitive market structure. From the characteristics and trends of stability, Taiwan's banking. market is of excessive competition and low profit, which leads to a low level and unoptimistic trend of banking stability. While the mainland is capital adequacy, high profit, there is some fluctuation in the stability of the banking sector, but the overall trend is in the right direction. By comparing the banking market structure and stability of the cross-strait banking industry, summed up the successful experiences and failures for the opening process of Taiwan and the mainland.The paper brings forwards some proposals:1. As a special section, banking industry can not be opened as a perfectly competitive market, the optimum market structure is oligarch competitive market.2. In the opening process of banking industry, a prudent order should be to first establish a sound financial regulation, and then gradually implement the privatization of public banks and finally open up market access, to allow the establishment of new commercial banks.3. The threshold private banks is too low to meet the stability of the banking system. We should take a steady policy in opening up private bank.4. We should take full account of the impact of foreign banks. The market share of foreign banks should be controlled by a security line. To better control the degree of opening up will be conducive to maintaining the stability of the banking system.5. The excessive privatization of the banking sector will lead to government financial control weakened, is not conducive to the stability of the banking sector.6. An effective monitoring should not only maximize the strengthening of banking supervision in the prevention of financial risks, must also have a market withdrawal mechanism., which enhance the effectiveness of supervision.